HLL takes Rs 1,600 crore hit due to counterfeiting

Hindustan Lever Ltd (HLL), India’s largest fast moving consumer goods firm, is getting some tough competition from an unexpected corner...

Hindustan Lever Ltd (HLL), India’s largest fast moving consumer goods firm, is getting some tough competition from an unexpected corner — fake goods manufacturers from Delhi’s Sadar Bazaar. The company is losing close to Rs 1,600 crore every year in revenue to counterfeit product makers.

HLL has estimated that while the Indian FMCG industry is losing close to Rs 2,500 crore of revenues, the government is losing another Rs 900 crore by way of various central and state taxes. ‘‘Fake products are becoming a major revenue drain for the Indian industry. With the mafia now backing them, it’s getting tough to nail counterfeiters,’’ HLL V-C M.K . Sharma said.

Today, as per a AC Neilson survey, close to 5-10 per cent of FMCG products sold in rural and small cities in India are fake. Besides FMCG products, auto spare parts and pharmaceuticals are facing problems due to fake products. ‘‘Close to 70 per cent pharma products sold in Bihar and 30-35 per cent of drugs sold to government hospitals are fake,’’ he said.

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While the government is unable to tackle the fake products menace due to lack of resources, the industry has set up a Brand Promotion Committee under the aegis of Ficci to protect its IP rights.

HLL has been going through a rough patch in the last few quarters. Its share price is today trading at Rs 142.70 — far below its 52-week high of Rs 218. For Q3 ended Sept. 2004, HLL posted a 27 per cent drop in profit at Rs 324.32 crore compared to Rs 443.22 crore for the same quarter previous year. Total income fell 4 per cent to Rs 2,486.82 crore.